ALABAMA UNIFORM POWER OF ATTORNEY ACT ARTICLE 1 GENERAL PROVISIONS. SECTION 101. SHORT TITLE. This act may be cited as

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1 ALABAMA UNIFORM POWER OF ATTORNEY ACT ARTICLE 1 GENERAL PROVISIONS SECTION 101. SHORT TITLE. This act may be cited as the Alabama Uniform Power of Attorney Act. ALABAMA COMMENT The Alabama adoption of this Act differs from the Uniform version in that the Alabama adoption only governs Powers of Attorney executed on or after the effective date of this Act. Powers executed prior to the effective date of this Act continue to be governed by the laws in existence of the time of their creation. See, Section 403 of this Act. Uniform Comment This Act, which replaces the Uniform Durable Power of Attorney Act, does not contain the word durable in the title. Pursuant to Section 104, a power of attorney created under the Act is durable unless the power of attorney provides that it is terminated by the incapacity of the principal. SECTION 102. DEFINITIONS. In this act: (1) Agent means a person granted authority to act for a principal under a power of attorney, whether denominated an agent, attorney-in-fact, or otherwise. The term includes an original agent, co-agent, successor agent, and a person to which an agent s authority is delegated. 1

2 (2) Durable, with respect to a power of attorney, means not terminated by the principal s incapacity. (3) Electronic means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities. (4) Good faith means honesty in fact. (5) Incapacity means inability of an individual to manage property or business affairs because the individual: (A) has an impairment in the ability to receive and evaluate information or make or communicate decisions even with the use of technological assistance; or (B) is: (i) (ii) missing; detained, including incarcerated in a penal system; or (iii) outside the United States and unable to return. 2

3 (6) Person means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. (7) Power of attorney means a writing or other record that grants authority to an agent to act in the place of the principal, whether or not the term power of attorney is used. (8) Presently exercisable general power of appointment, with respect to property or a property interest subject to a power of appointment, means power exercisable at the time in question to vest absolute ownership in the principal individually, the principal s estate, the principal s creditors, or the creditors of the principal s estate. The term includes a power of appointment not exercisable until the occurrence of a specified event, the satisfaction of an ascertainable standard, or the passage of a specified period only after the occurrence of the specified event, the satisfaction of the 3

4 ascertainable standard, or the passage of the specified period. The term does not include a power exercisable in a fiduciary capacity or only by will. (9) Principal means an individual who grants authority to an agent in a power of attorney. (10) Property means anything that may be the subject of ownership, whether real or personal, or legal or equitable, or any interest or right therein. (11) Record means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. (12) Sign means, with present intent to authenticate or adopt a record: (A) to execute or adopt a tangible symbol; or (B) to attach to or logically associate with the record an electronic sound, symbol, or process. (13) State means a state of the United States, 4

5 the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. (14) Stocks and bonds means stocks, bonds, mutual funds, and all other types of securities and financial instruments, whether held directly, indirectly, or in any other manner. The term does not include commodity futures contracts and call or put options on stocks or stock indexes. ALABAMA COMMENT This section is identical to Section 102 of the Uniform Power of Attorney Act. As noted above in the uniform comments, in this Act, Section 102(1) Agent, replaces the use of attorney to designate the holder of the power of attorney. The statutory definition of Durable in Section 102(2) is consistent with Ala. Code , though, as noted above, the default in the current Act has been changed so that a power of attorney is now presumed durable. The definition of Section 102(5), Incapacity is consistent with the definition of incapacity and disability in the Alabama Uniform Guardianship and Protective Proceedings Act in 26-2A- 20 and 26-2A-130 in its focus on the inability of the individual to manage property or business affairs, but is not identical to the language in those sections. The definition of Power of Attorney in Section 102(7) is similar to Ala. Code (a), but the current act removes the 5

6 requirement that a written power of attorney, intended to be durable, designate that it shall not be affected by disability, incompetency, or incapacity of the principal, as it is now presumed that the power of attorney is durable. This Act also clarifies that the instrument does not have to designate the grant as a power of attorney as long as it grants the appropriate power to the agent. The other definitions have no counterparts in the Alabama Durable Power of Attorney provisions. Uniform Comment Although most of the definitions in Section 102 are selfexplanatory, a few of the terms warrant further comment. Agent replaces the term attorney in fact used in the Uniform Durable Power of Attorney Act to avoid confusion in the lay public about the meaning of the term and the difference between an attorney in fact and an attorney at law. Agent was also used in the Uniform Statutory Form Power of Attorney Act which this Act supersedes. Incapacity replaces the term disability used in the Uniform Durable Power of Attorney Act in recognition that disability does not necessarily render an individual incapable of property and business management. The definition of incapacity stresses the operative consequences of the individual s impairment inability to manage property and business affairs rather than the impairment itself. The definition of incapacity in the Act is also consistent with the standard for appointment of a conservator under Section 401 of the Uniform Guardianship and Protective Proceedings Act as amended in The definition of power of attorney clarifies that the term applies to any grant of authority in a writing or other record from a principal to an agent which appears from the grant to be a power of attorney, without regard to whether the words power of attorney are actually used in the grant. Presently exercisable general power of appointment is 6

7 defined to clarify that where the phrase appears in the Act it does not include a power exercisable by the principal in a fiduciary capacity or exercisable only by will. Cf. Restatement (Third) of Property (Wills and Don. Trans.) 19.8 cmt. d (Tentative Draft No. 5, approved 2006) (noting that unless the donor of a presently exercisable power of attorney has manifested a contrary intent, it is assumed that the donor intends that the donee s agent be permitted to exercise the power for the benefit of the donee). Including in a power of attorney the authority to exercise a presently exercisable general power of appointment held by the principal is consistent with the objective of giving an agent comprehensive management authority over the principal s property and financial affairs. The term appears in Section 211 (Estates, Trusts, and Other Beneficial Interests) in the context of authority to exercise for the benefit of the principal a presently exercisable general power of appointment held by the principal (see Section 211(b)(3)), and in Section 217 (Gifts) in the context of authority to exercise for the benefit of someone else a presently exercisable general power of appointment held by the principal (see Section 217(b)(1)). The term is also incorporated by reference when using the statutory form in Section 301 to grant authority with respect to Estates, Trusts, and Other Beneficial Interests or authority with respect to Gifts. If a principal wishes to delegate authority to exercise a power that the principal holds in a fiduciary capacity, Section 201(a)(7) requires that the power of attorney contain an express grant of such authority. Furthermore, delegation of a power held in a fiduciary capacity is possible only if the principal has authority to delegate the power, and the agent s authority is necessarily limited by whatever terms govern the principal s ability to exercise the power. SECTION 103. APPLICABILITY. This act applies to all powers of attorney, executed on or after the effective date of this act, except: (1) a power to the extent it is coupled with an interest in the subject of the power, including a power given to or for the 7

8 benefit of a creditor in connection with a credit transaction; (2) a power to make health-care decisions; (3) a proxy or other delegation to exercise voting rights or management rights with respect to an entity; and (4) a power created on a form prescribed by a government or governmental subdivision agency, or instrumentality for a governmental purpose. ALABAMA COMMENT This section is substantially similar to Section 103 of the Uniform Power of Attorney Act, but had been modified to clarify that Alabama s adoption of the act will only apply to Powers of Attorney executed on or after the effective date of the act. See, Section 403. Section 103(2) of this act excludes from this section delegations of authority to make health-care decisions for the principal. General delegations of authority to make health care decisions after the effective date of this act will continue to be governed by current law. Alabama Code (g). Advanced Directives for Health Care (Living Will and Health Care Proxy) will still be governed under 22-8A-1 et. seq. Uniform Comment The Uniform Power of Attorney Act is intended to be comprehensive with respect to delegation of surrogate decision making authority over an individual s property and property interests, whether for the purpose of incapacity planning or mere convenience. Given that an agent will likely exercise authority at times when the principal cannot monitor the agent s conduct, the Act specifies minimum agent duties and protections for the principal s benefit. These provisions, however, may not be 8

9 appropriate for all delegations of authority that might otherwise be included within the definition of a power of attorney. Section 103 lists delegations of authority that are excluded from the Act because the subject matter of the delegation, the objective of the delegation, the agent s role with respect to the delegation, or a combination of the foregoing, would make application of the Act s provisions inappropriate. Paragraph (1) excludes a power to the extent that it is coupled with an interest in the subject of the power. This exclusion addresses situations where, due to the agent s interest in the subject matter of the power, the agent is not intended to act as the principal s fiduciary. See Restatement (Third) of Agency 3.12 (2006) and M.T. Brunner, Annotation, What Constitutes Power Coupled with Interest within Rule as to Termination of Agency, 28 A.L.R.2d 1243 (1953). Common examples of powers coupled with an interest include powers granted to a creditor to perfect or protect title in, or to sell, pledged collateral. While the example of a power given to or for the benefit of a creditor in connection with a credit transaction is highlighted in paragraph (1), it is not meant to exclude application of paragraph (1) to other contexts in which a power may be coupled with an interest, such as a power held by an insurer to settle or confess judgment on behalf of an insured. See, e.g., Hayes v. Gessner, 52 N.E.2d 968 (Mass. 1944). Paragraph (2) excludes from the Act delegations of authority to make health-care decisions for the principal. Such delegations are covered under other law of the jurisdiction. The Act recognizes, however, that matters of financial management and health-care decision making are often interdependent. The Act consequently provides in Section 114(b)(5) a default rule that an agent under the Act must cooperate with the principal s health-care decision maker. Likewise, paragraph (3) excludes from the Act a proxy or other delegation to exercise voting rights or management rights with respect to an entity. The rules with respect to those rights are typically controlled by entity-specific statutes within a jurisdiction. See, e.g., Model Bus. Corp. Act 7.22 (2002); Unif. Ltd. Partnership Act 118 (2001); and Unif. Ltd. Liability Co. Act 404(e) (1996). Notwithstanding the exclusion of such delegations 9

10 from the operation of this Act, Section 209 contemplates that a power granted to an agent with respect to operation of an entity or business includes the authority to exercise in person or by proxy... a right, power, privilege, or option the principal has or claims to have as the holder of stocks and bonds.... (see paragraph (5) of Section 209). Thus, while a person that holds only a proxy pursuant to an entity voting statute will not be subject to the provisions of this Act, an agent that is granted Section 209 authority is subject to the Act because the principal has given the agent authority that is greater than that of a mere voting proxy. In fact, typical entity statutes contemplate that a principal s agent or attorney in fact may appoint a proxy on behalf of the principal. See, e.g., Model Bus. Corp. Act 7.22 (2002); Unif. Ltd. Partnership Act 118 (2001); and Unif. Ltd. Liability Co. Act 404(e) (1996). Paragraph (4) excludes from the Act any power created on a governmental form for a governmental purpose. Like the excluded powers in paragraphs (2) and (3), the authority for a power created on a governmental form emanates from other law and is generally for a limited purpose. Notwithstanding this exclusion, the Act specifically provides in paragraph (7) of Section 203 that a grant of authority to an agent includes, with respect to that subject matter, authority to prepare, execute, and file a record, report, or other document to safeguard or promote the principal s interest under a statute or governmental regulation. Section 203, paragraph (8), further clarifies that the agent has the authority to communicate with any representative or employee of a government or governmental subdivision, agency, or instrumentality, on behalf of the principal. The intent of these provisions is to minimize the need for a special power on a governmental form with respect to any subject matter over which an agent is granted authority under the Act. SECTION 104. POWER OF ATTORNEY IS DURABLE. A power of attorney to which this act applies is durable, unless it expressly provides that it is terminated by the 10

11 incapacity of the principal. ALABAMA COMMENT This section is substantially similar to Section 104 of the Uniform Power of Attorney Act, but has been modified to be consistent with the changes Alabama has made to the applicability of the act in Sections 103 and 403. This section differs from current law. Section (a) requires that in order to make the power of attorney durable, there has to must be language in the instrument indicating the principal s intent to do so. A healthcare power of attorney is governed by Sections and Uniform Comment Section 104 establishes that a power of attorney created under the Act is durable unless it expressly states otherwise. This default rule is the reverse of the approach under the Uniform Durable Power of Attorney Act and based on the assumption that most principals prefer durability as a hedge against the need for guardianship. See also Section 107 Comment (noting that the default rules of the jurisdiction s law under which a power of attorney is created, including the default rule for durability, govern the meaning and effect of a power of attorney). SECTION 105. EXECUTION OF POWER OF ATTORNEY. A power of attorney must be signed by the principal or in the principal s conscious presence by another individual directed by the principal to sign the principal s name on the power of attorney. A signature on a power of attorney is presumed to be genuine if the principal acknowledges the signature before a notary public or other individual authorized by law to take 11

12 acknowledgments. ALABAMA COMMENT This section is identical to Section 105 of the Uniform Power of Attorney Act. Section does not have specific formal requirements for the creation of a power of attorney, other than the indication in Section (a) that it must be in writing and must contain language of intent in order to make it durable. Uniform Comment While notarization of the principal s signature is not required to create a valid power of attorney, this section strongly encourages the practice by according acknowledged signatures a statutory presumption of genuineness. Furthermore, because Section 119 (Acceptance of and Reliance Upon Acknowledged Power of Attorney) and alternative Sections 120 (Alternative A Liability for Refusal to Accept Acknowledged Power of Attorney, and Alternative B Liability for Refusal to Accept Acknowledged Statutory Form Power of Attorney) do not apply to unacknowledged powers, persons who are presented with an unacknowledged power of attorney may be reluctant to accept it. As a practical matter, an acknowledged signature is required if the power of attorney will be recorded by the agent in conjunction with the execution of real estate documents on behalf of the principal. See R.P.D., Annotation, Recording Laws as Applied to Power of Attorney under which Deed or Mortgage is Executed, 114 A.L.R. 660 (1938). This section, at a minimum, requires that the power of attorney be signed by the principal or by another individual who the principal has directed to sign the principal s name. If another individual is directed to sign the principal s name, the signing must occur in the principal s conscious presence. The 1990 amendments to the Uniform Probate Code codified the conscious presence test for the execution of wills (Section 2-502(a)(2)), which generally requires that the signing is sufficient if it takes place within the range of the senses usually sight or hearing of the 12

13 individual who directed that another sign the individual s name. See Unif. Probate Code cmt. (2003). For a discussion of acknowledgment of a signature by an individual whose name is signed by another, see R.L.M., Annotation, Formal Acknowledgment of Instrument by One Whose Name is Signed thereto by Another as an Adoption of the Signature, 57 A.L.R. 525 (1928). ATTORNEY. SECTION 106. VALIDITY OF POWER OF (a) A power of attorney executed in this state on or after the effective date of this act is valid if its execution complies with Section 105. (b) A power of attorney executed in this state before the effective date of this act is valid if its execution complied with the law of this state as it existed at the time of execution. (c) A power of attorney executed other than in this state is valid in this state if, when the power of attorney was executed, the execution complied with: (1) the law of the jurisdiction that determines the meaning and effect of the power of attorney pursuant to Section 107; (2) the requirements for a military power of attorney pursuant to 10 U.S.C. Section 1044b, as amended; 13

14 or (3) Alabama Law. (d) Except as otherwise provided by statute other than this act, a photocopy or electronically transmitted copy of an original power of attorney has the same effect as the original. ALABAMA COMMENT Alabama added subsection (c)(3) which provides that a power of attorney which complies with the applicable requirements of Alabama law at the time it was executed will be honored in Alabama even if it did not comply with the law of the state in which it was executed. Uniform Comment One of the purposes of the Uniform Power of Attorney Act is promotion of the portability and use of powers of attorney. Section 106 makes clear that the Act does not affect the validity of pre-existing powers of attorney executed under prior law in the enacting jurisdiction, powers of attorney validly created under the law of another jurisdiction, and military powers of attorney. While the effect of this section is to recognize the validity of powers of attorney created under other law, it does not abrogate the traditional grounds for contesting the validity of execution such as forgery, fraud, or undue influence. This section also provides that unless another law in the jurisdiction requires presentation of the original power of attorney, a photocopy or electronically transmitted copy has the same effect as the original. An example of another law that might require presentation of the original power of attorney is the jurisdiction s recording act. See, e.g., Restatement (Third) of Property (Wills & Don. Trans.) 6.3 cmt. e (2003) (noting that in order to record a deed, some states require that the document of transfer be signed, sealed, attested, and acknowledged ). 14

15 SECTION 107. MEANING AND EFFECT OF POWER OF ATTORNEY. The meaning and effect of a power of attorney is determined by the law of the jurisdiction indicated in the power of attorney and, in the absence of an indication of jurisdiction, by the law of the jurisdiction in which the power of attorney was executed. ALABAMA COMMENT This section is identical to Section 107 of the Uniform Power of Attorney Act. Uniform Comment This section recognizes that a foreign power of attorney, or one executed before the effective date of the Uniform Power of Attorney Act, may have been created under different default rules than those in this Act. Section 107 provides that the meaning and effect of a power of attorney is to be determined by the law under which it was created. For example, the law in another jurisdiction may provide for different default rules with respect to durability of a power of attorney (see Section 104), the authority of coagents (see Section 111) or the scope of specific authority such as the authority to make gifts (see Section 217). Section 107 clarifies that the principal s intended grant of authority will be neither enlarged nor narrowed by virtue of the agent using the power in a different jurisdiction. For a discussion of the issues that can arise with interjurisdictional use of powers of attorney, see Linda S. Whitton, Crossing State Lines with Durable Powers, Prob. & Prop., Sept./Oct. 2003, at 28. This section also establishes an objective means for determining what jurisdiction s law the principal intended to govern the meaning and effect of a power of attorney. The phrase, the law of the jurisdiction indicated in the power of attorney, is intentionally broad, and includes any statement or reference in a 15

16 power of attorney that indicates the principal s choice of law. Examples of an indication of jurisdiction include a reference to the name of the jurisdiction in the title or body of the power of attorney, citation to the jurisdiction s power of attorney statute, or an explicit statement that the power of attorney is created or executed under the laws of a particular jurisdiction. In the absence of an indication of jurisdiction in the power of attorney, Section 107 provides that the law of the jurisdiction in which the power of attorney was executed controls. The distinction between the law of the jurisdiction indicated in the power of attorney and the law of the jurisdiction in which the power of attorney was executed is an important one. The common practice of property ownership in more than one jurisdiction increases the likelihood that a principal may execute in one jurisdiction a power of attorney that was created and intended to be interpreted under the laws of another jurisdiction. A clear indication of the jurisdiction s law that is intended to govern the meaning and effect of a power of attorney is therefore advisable in all powers of attorney. See, e.g., Section 301 (providing for the name of the jurisdiction to appear in the title of the statutory form power of attorney). SECTION 108. NOMINATION OF CONSERVATOR OR GUARDIAN; RELATION OF AGENT TO COURT- APPOINTED FIDUCIARY. (a) In a power of attorney, a principal may nominate a conservator or guardian of the principal s estate or guardian of the principal s person for consideration by the court, if protective proceedings for the principal s estate or person are begun after the principal executes the power of attorney. Except for good cause shown or disqualification, the court shall make its appointment in accordance with the principal's most recent nomination. 16

17 (b) If, after a principal executes a power of attorney, a court appoints a conservator or guardian of the principal s estate or other fiduciary charged with the management of some or all of the principal s property, all the property of the principal or all of his or her property except specified exclusions, the agent is accountable to the fiduciary as well as to the principal. In such event, the fiduciary has the same power to revoke or amend the power of attorney that the principal would have had if he or she was not disabled, incompetent, or incapacitated. [The power of attorney is not terminated and the agent s authority continues unless limited, suspended, or terminated by the court.] ALABAMA COMMENT Subsection (a) follows the language of the uniform act and is consistent with Alabama Code (c)(2). Subsection (b) diverges from the uniform act but is consistent with current Alabama law which allows a court appointed conservator the same power of revocation and amendment that a principal would have. Ala. Code (c). Uniform Comment Section 108(b) is a departure from the Uniform Durable Power of Attorney Act which gave a court-appointed fiduciary the same power to revoke or amend a power of attorney as the principal would have if not incapacitated. See Unif. Durable Power of Atty. Act 3(a) (1987). In contrast, this Act gives deference to the principal s choice of agent by providing that the agent s 17

18 authority continues, notwithstanding the later court appointment of a fiduciary, unless the court acts to limit or terminate the agent s authority. This approach assumes that the later-appointed fiduciary s authority should supplement, not truncate, the agent s authority. If, however, a fiduciary appointment is required because of the agent s inadequate performance or breach of fiduciary duties, the court, having considered this evidence during the appointment proceedings, may limit or terminate the agent s authority contemporaneously with appointment of the fiduciary. Section 108(b) is consistent with the state legislative trend that has departed from the Uniform Durable Power of Attorney Act. See, e.g., 755 Ill. Comp. Stat. Ann. 45/2-10 (West 1992); Ind. Code Ann (West 1994); Kan. Stat. Ann (2005); Mo. Ann. Stat (West 2001); N.J. Stat. Ann. 46:2B-8.4 (West 2003); N.M. Stat. Ann A (LexisNexis 2004); Utah Code Ann (Supp. 2006); Vt. Stat. Ann. tit. 14, 3509(a) (2002); Va. Code Ann B (2006). Section 108(b) is also consistent with the Uniform Health-Care Decisions Act 6(a) (1993), which provides that a guardian may not revoke the ward s advance health-care directive unless the court appointing the guardian expressly so authorizes. Furthermore, it is consistent with the Uniform Guardianship and Protective Proceedings Act (1997), which provides that a guardian or conservator may not revoke the ward s or protected person s power of attorney for health-care or financial management without first obtaining express authority of the court. See Unif. Guardianship & Protective Proc. Act 316(c) (guardianship), 411(d) (protective proceedings). Deference for the principal s autonomous choice is evident both in the presumption that an agent s authority continues unless limited or terminated by the court, and in the directive that the court shall appoint a fiduciary in accordance with the principal s most recent nomination (see subsection (a)). Typically, a principal will nominate as conservator or guardian the same individual named as agent under the power of attorney. Favoring the principal s choice of agent and nominee, an approach consistent with most statutory hierarchies for guardian selection (see Unif. Guardianship & Protective Proc. Act 310(a)(2) (1997)), also discourages guardianship petitions filed for the sole purpose of thwarting the agent s authority to gain control over a vulnerable 18

19 principal. See Unif. Guardianship & Protective Proc. Act 310 cmt. (1997). See also Linda S. Ershow-Levenberg, When Guardianship Actions Violate the Constitutionally-Protected Right of Privacy, NAELA News, Apr. 2005, at 1 (arguing that appointment of a guardian when there is a valid power of attorney in place violates the alleged incapacitated person s constitutionally protected rights of privacy and association). EFFECTIVE. SECTION 109. WHEN POWER OF ATTORNEY (a) A power of attorney is effective when executed unless the principal provides in the power of attorney that it becomes effective at a future date or upon the occurrence of a future event or contingency. (b) If a power of attorney becomes effective upon the occurrence of a future event or contingency, the principal, in the power of attorney, may authorize one or more persons to determine in a writing or other record that the event or contingency has occurred. (c) If a power of attorney becomes effective upon the principal s incapacity and the principal has not authorized a person to determine whether the principal is incapacitated, or the person authorized is unable or unwilling to make the determination, the power of attorney becomes effective upon a determination in a 19

20 writing or other record by: (1) a physician or licensed psychologist that the principal is incapacitated within the meaning of Section 102(5)(A); or (2) an attorney at law, a judge, or an appropriate governmental official that the principal is incapacitated within the meaning of Section 102(5)(B). (d) A person authorized by the principal in the power of attorney to determine that the principal is incapacitated may act as the principal s personal representative pursuant to the Health Insurance Portability and Accountability Act, Sections 1171 through 1179 of the Social Security Act, 42 U.S.C. Section 1320d, as amended, and applicable regulations, to obtain access to the principal s health-care information and communicate with the principal s healthcare provider. ALABAMA COMMENT This section is identical to Section 109 of the Uniform Power of Attorney Act. Uniform Comment This section establishes a default rule that a power of attorney is effective when executed. If the principal chooses to create what is commonly known as a springing or contingent power of attorney one that becomes effective at a future date or 20

21 upon a future event or contingency the principal may authorize the agent or someone else to provide written verification that the event or contingency has occurred (subsection (b)). Because the person authorized to verify the principal s incapacitation will likely need access to the principal s health information, subsection (d) qualifies that person to act as the principal s personal representative for purposes of the Health Insurance Portability and Accountability Act (HIPAA). See 45 C.F.R (g)(1)- (2) (2006) (providing that for purposes of disclosing an individual s protected health information, a covered entity must... treat a personal representative as the individual ). Section 109 does not, however, empower the agent to make health-care decisions for the principal. See Section 103 and comment (discussing exclusion from this Act of powers to make health-care decisions). The default rule reflects a best practices philosophy that any agent who can be trusted to act for the principal under a springing power of attorney should be trustworthy enough to hold an immediate power. Survey evidence suggests, however, that a significant number of principals still prefer springing powers, most likely to maintain privacy in the hope that they will never need a surrogate decision maker. See Linda S. Whitton, National Durable Power of Attorney Survey Results and Analysis, National Conference of Commissioners on Uniform State Laws, 6-7 (2002), (reporting that 23% of lawyer respondents found their clients preferred springing powers, 61% reported a preference for immediate powers, and 16% saw no trend; however, 89% stated that a power of attorney statute should authorize springing powers). If the principal s incapacity is the trigger for a springing power of attorney and the principal has not authorized anyone to make that determination, or the authorized person is unable or unwilling to make the determination, this section provides a default mechanism to trigger the power. Incapacity based on the principal s impairment may be verified by a physician or licensed psychologist (subsection (c)(1)), and incapacity based on the principal s unavailability (i.e., the principal is missing, detained, or unable to return to the United States) may be verified by an 21

22 attorney at law, judge, or an appropriate governmental official (subsection(c)(2)). Examples of appropriate governmental officials who may be in a position to determine that the principal is incapacitated within the meaning of Section 102(5)(B) include an officer acting under authority of the United States Department of State or uniformed services of the United States or a sworn federal or state law enforcement officer. The default mechanism for triggering a power of attorney is available only when no incapacity determination has been made. It is not available to challenge the determination made by the principal s authorized designee. SECTION 110. TERMINATION OF POWER OF ATTORNEY OR AGENT S AUTHORITY. (a) A power of attorney terminates when: (1) the principal dies; (2) the principal becomes incapacitated, if the power of attorney is not durable; (3) the principal revokes the power of attorney; (4) the power of attorney provides that it terminates; (5) the purpose of the power of attorney is accomplished; or (6) the principal revokes the agent s authority or the agent dies, becomes incapacitated, or resigns, and the power of attorney does not provide for another agent to act under the power of attorney. ; or 22

23 (7) revoked by a fiduciary appointed by a court. (b) An agent s authority terminates when: (1) the principal revokes the authority; (2) the agent dies, becomes incapacitated, or resigns; (3) an action is filed for the [dissolution] divorce or annulment of the agent s marriage to the principal or their legal separation, unless the power of attorney otherwise provides; or (4) the power of attorney terminates. (c) Unless the power of attorney otherwise provides, an agent s authority is exercisable until the authority terminates under subsection (b), notwithstanding a lapse of time since the execution of the power of attorney. (d) Termination of an agent s authority or of a power of attorney is not effective as to the agent or another person that, without actual knowledge of the termination, acts in good faith under the power of attorney. An act so performed, unless otherwise invalid or unenforceable, binds the principal and the principal s successors in interest. 23

24 (e) Incapacity of the principal of a power of attorney that is not durable does not revoke or terminate the power of attorney as to an agent or other person that, without actual knowledge of the incapacity, acts in good faith under the power of attorney. An act so performed, unless otherwise invalid or unenforceable, binds the principal and the principal s successors in interest. (f) The execution of a power of attorney does not revoke a power of attorney previously executed by the principal unless the subsequent power of attorney provides that the previous power of attorney is revoked or that all other powers of attorney are revoked. ALABAMA COMMENT This section follows the Uniform act except for the addition of subsection (a)(7) which incorporates the concept that a Power of Attorney may be revoked by a court appointed fiduciary as provided in Section 108(b) and Section (c)(1). Section 110(d) is substantially similar to Alabama Code (d)(1). Alabama removed the phrase or another person from subsections (d) and (e) as liability for actions of third parties is dealt with in Section 119 of the act. Uniform Comment This section addresses termination of a power of attorney or an agent s authority under a power of attorney. It first lists termination events (see subsections (a) and (b)), and then lists 24

25 circumstances that, in contrast, either do not invalidate the power of attorney (see subsections (c) and (f)) or the actions taken pursuant to the power of attorney (see subsections (d) and (e)). Subsection (c) provides that a power of attorney under the Act does not become stale. Unless a power of attorney provides for termination upon a certain date or after the passage of a period of time, lapse of time since execution is irrelevant to validity, a concept carried over from the Uniform Durable Power of Attorney Act. See Unif. Durable Power of Atty. Act 1 (as amended in 1987). Similarly, subsection (f) clarifies that a subsequently executed power of attorney will not revoke a prior power of attorney by virtue of inconsistency alone. To effect a revocation, a subsequently executed power of attorney must expressly revoke a previously executed power of attorney or state that all other powers of attorney are revoked. The requirement of express revocation prevents inadvertent revocation when the principal intends for one agent to have limited authority that overlaps with broader authority held by another agent. For example, the principal who has given one agent a very broad power of attorney, including general authority with respect to real property, may later wish to give another agent limited authority to execute closing documents with respect to out-of-town real estate. Subsections (d) and (e) emphasize that even a termination event is not effective as to the agent or person who, without actual knowledge of the termination event, acts in good faith under the power of attorney. For example, the principal s death terminates a power of attorney (see subsection (a)(1)), but an agent who acts in good faith under a power of attorney without actual knowledge of the principal s death will bind the principal s successors in interest with that action (see subsection (d)). The same result is true if the agent knows of the principal s death, but the person who accepts the agent s apparent authority has no actual knowledge of the principal s death. See Restatement (Third) of Agency 3.11 (2006) (stating that termination of actual authority does not by itself end any apparent authority held by an agent ). See also Section 119(c) (stating that [a] person that in good faith accepts an acknowledged power of attorney without actual knowledge that the power of attorney is... terminated... may rely upon the power of attorney as if the power of attorney were... still in effect.... ). These concepts are also carried forward from the Uniform 25

26 Durable Power of Attorney Act. See Unif. Durable Power Atty. Act 4 (1987). Of special note in the list of termination events is subsection (b)(3) which provides that a spouse-agent s authority is revoked when an action is filed for the dissolution or annulment of the agent s marriage to the principal, or their legal separation. Although the filing of an action for dissolution or annulment might render a principal particularly vulnerable to self-interested actions by a spouse-agent, subsection (b)(3) is not mandatory and may be overridden in the power of attorney. There may be special circumstances precipitating the dissolution, such as catastrophic illness and the need for public benefits, that would prompt the principal to specify that the agent s authority continues notwithstanding dissolution, annulment or legal separation. AGENTS. SECTION 111. COAGENTS AND SUCCESSOR (a) A principal may designate two or more persons to act as coagents. Unless the power of attorney otherwise provides, each coagent may exercise its authority independently. (b) A principal may designate one or more successor agents to act if an agent resigns, dies, becomes incapacitated, is not qualified to serve, or declines to serve. A principal may grant authority to designate one or more successor agents to an agent or other person designated by name, office, or function. Unless the power of attorney otherwise provides, a successor agent: (1) has the same authority as that granted to the 26

27 original agent; and (2) may not act until all predecessor agents have resigned, died, become incapacitated, are no longer qualified to serve, or have declined to serve. (c) Except as otherwise provided in the power of attorney and subsection (d), an agent that does not participate in or conceal a breach of fiduciary duty committed by another agent, including a predecessor agent, is not liable for the actions of the other agent. (d) An agent that has accepted appointment and has actual knowledge of a breach or imminent breach of fiduciary duty by another agent shall notify the principal and, if the principal is incapacitated, take any action reasonably appropriate in the circumstances to safeguard the principal s best interest. An agent that fails to notify the principal or take action as required by this subsection is liable for the reasonably foreseeable damages that could have been avoided if the agent had notified the principal or taken such action. ALABAMA COMMENT This section is identical to Section 111 of the Uniform Power of Attorney Act, except that the phrase has accepted appointment and has been added to the first sentence in 27

28 subsection (d). Uniform Comment This section provides several default rules that merit careful consideration by the principal. Subsection (a) states that if a principal names coagents, each coagent may exercise its authority independently unless otherwise directed in the power of attorney. The Act adopts this default position to discourage the practice of executing separate, co-extensive powers of attorney in favor of different agents, and to facilitate transactions with persons who are reluctant to accept a power of attorney from only one of two or more named agents. This default rule should not, however, be interpreted as encouraging the practice of naming coagents. For a principal who can still monitor the activities of an agent, naming coagents multiplies monitoring responsibilities and significantly increases the risk that inconsistent actions will be taken with the principal s property. For the incapacitated principal, the risk is even greater that coagents will use the power of attorney to vie for control of the principal and the principal s property. Although the principal can override the default rule by requiring coagents to act by majority or unanimous consensus, such a requirement impedes use of the power of attorney, especially among agents who do not share close physical or philosophical proximity. A more prudent practice is generally to name one original agent and one or more successor agents. If desirable, a principal may give the original agent authority to delegate the agent s authority during periods when the agent is temporarily unavailable to serve (see Section 201(a)(5)). Subsection (b) states that unless a power of attorney otherwise provides, a successor agent has the same authority as that granted to the original agent. While this default provision ensures that the scope of authority granted to the original agent can be carried forward by successors, a principal may want to consider whether a successor agent is an appropriate person to exercise all of the authority given to the original agent. For example, authority to make gifts, to create, amend, or revoke an inter vivos trust, or to create or change survivorship and beneficiary designations (see Section 201(a)) may be appropriate for a spouse-agent, but not for an adult child who is named as the successor agent. 28

29 Subsection (c) provides a default rule that an agent is not liable for the actions of another agent unless the agent participates in or conceals the breach of fiduciary duty committed by that other agent. Consequently, absent specification to the contrary in the power of attorney, an agent has no duty to monitor another agent s conduct. However, subsection (d) does require that an agent that has actual knowledge of a breach or imminent breach of fiduciary duty must notify the principal, and if the principal is incapacitated, take reasonably appropriate action to safeguard the principal s best interest. Subsection (d) provides that if an agent fails to notify the principal or to take action to safeguard the principal s best interest, that agent is only liable for the reasonably foreseeable damages that could have been avoided had the agent provided the required notification. SECTION 112. REIMBURSEMENT AND COMPENSATION OF AGENT. Unless the power of attorney otherwise provides, an agent is entitled to reimbursement of expenses reasonably incurred on behalf of the principal and to compensation that is reasonable under the circumstances. ALABAMA COMMENT This section is identical to Section 112 of the Uniform Power of Attorney Act. Uniform Comment This section provides a default rule that an agent is entitled to reimbursement of expenses reasonably incurred on behalf of the principal and to reasonable compensation. While it is unlikely that a principal would choose to alter the default rule as to expenses, a principal s circumstances may warrant including limitations in the power of attorney as to the categories of expenses the agent may incur; likewise, the principal may choose to specify the terms of compensation rather than leave that determination to a 29

30 reasonableness standard. Although many family-member agents serve without compensation, payment of compensation to the agent may be advantageous to the principal in circumstances where the principal needs to spend down income or resources to meet qualifications for public benefits. SECTION 113. AGENT S ACCEPTANCE. Except as otherwise provided in the power of attorney, a person accepts appointment as an agent under a power of attorney by exercising authority or performing duties as an agent or by any other assertion or conduct indicating acceptance. ALABAMA COMMENT This section is identical to Section 113 of the Uniform Power of Attorney Act. Uniform Comment This section establishes a default rule for agent acceptance of appointment under a power of attorney. Unless a different method is provided in the power of attorney, an agent s acceptance occurs upon exercise of authority, performance of duties, or any other assertion or conduct indicating acceptance. Acceptance is the critical reference point for commencement of the agency relationship and the imposition of fiduciary duties (see Section 114(a)). Because a person may be unaware that the principal has designated the person as an agent in a power of attorney, clear demarcation of when an agency relationship commences is necessary to protect both the principal and the agent. See Karen E. Boxx, The Durable Power of Attorney s Place in the Family of Fiduciary Relationships, 36 Ga. L. Rev. 1, 41 (2001) (noting that fiduciary duties should be imposed only to the extent the attorneyin-fact knows of the role, is able to accept responsibility, and affirmatively accepts ). The Act also provides a default method for agent resignation (see Section 118), which terminates the agency relationship (see Section 110(b)(2)). 30

31 SECTION 114. AGENT S DUTIES. (a) Notwithstanding provisions in the power of attorney, an agent that has accepted appointment shall: (1) act in accordance with the principal s reasonable expectations to the extent actually known by the agent and, otherwise, in the principal s best interest; (2) act in good faith; and (3) act only within the scope of authority granted in the power of attorney. (b) Except as otherwise provided in the power of attorney, an agent that has accepted appointment shall: (1) act loyally for the principal s benefit; (2) act so as not to create a conflict of interest that impairs the agent s ability to act impartially in the principal s best interest; (3) act with the care, competence, and diligence ordinarily exercised by agents in similar circumstances; (4) keep a record of all receipts, disbursements, and transactions made on behalf of the principal; (5) cooperate with a person that has authority to 31

32 make health-care decisions for the principal to carry out the principal s reasonable expectations to the extent actually known by the agent and, otherwise, act in the principal s best interest; and (6) attempt to preserve the principal s estate plan, to the extent actually known by the agent, if preserving the plan is consistent with the principal s best interest based on all relevant factors, including: (A) the value and nature of the principal s property; (B) the principal s foreseeable obligations and need for maintenance; (C) minimization of taxes, including income, estate, inheritance, generation-skipping transfer, and gift taxes; and (D) eligibility for a benefit, a program, or assistance under a statute or regulation. (c) An agent that acts in good faith is not liable to any beneficiary of the principal s estate plan for failure to preserve the plan. 32